MBIA's Shares Jumped: What You Need to Know

By Anders Bylund | More Articles
October 5, 2011 | Comments (1)

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of mortgage insurer MBIA (NYSE: MBI ) saw a rare sliver of daylight today, jumping as much as 11.2% on fairly average trading volume.

So what: Like penguins and coyotes, the mortgage insurers tend to travel in packs, and that's what we're looking at today, too. What looks like MBIA making a solo move turns into a stampeding herd if you zoom out to include the last hour of the Tuesday session. In that light, MBIA peaked at a 16% gain while The PMI Group (NYSE: PMI ) jumped 19% at most; both MGIC Investment (NYSE: MTG ) and Radian (NYSE: RDN ) soared as much as 18%. MBIA was just a little late to the party.

Now what: With mortgage interest rates falling and closing fees on the rise, not to mention the Bank of America (NYSE: BAC ) drama over Countrywide drawing to a close, it's not hard to see why mortgage insurers are heaving a collective sigh of relief -- risks are being worked out of the system. That being said, these three musketeers have lost between 37% and 94% of their value in 2011. You have to have a big appetite for risk to consider buying any of them today.

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Fool contributor Anders Bylund holds no position in any of the companies discussed here. The Motley Fool owns shares of Bank of America. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. You can check out Anders' holdings and a concise bio, follow him on Twitter or Google , or peruse our Foolish disclosure policy.

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Report this Comment On October 05, 2011, at 4:37 PM, dumbarticle wrote:

Sometimes you just read something and wonder if the author put even five minutes of work into writing it.
MBIA insures bonds, some of which are backed by mortgages. PMI, RDN, etc. insure mortgages directly. Though they sound similar, they are two completely different businesses with different investment controversies.
No wonder the retail investor always gets the short straw if this is what they depend on.

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